Its no question that participation has dropped over the last few weeks. As noted in our recent research piece, the bullish percent for the NYSE (^BPNYSE) reversed lower to open the month of August. This established a lower participation top than at other points over the last few years… a net negative at first glance. To understand if this is truly a negative development, however, it may be useful to re-define what these indicators truly are. Remember, “participation” is a function of how many stocks are moving up or down… not of pure performance. It is true that most times the two go hand in hand, but there are certainly instances (most recently in 2023) where the two can disconnect.

Today’s article will focus mainly on this idea through the lens of ^BPNDX which measures the percentage of Nasdaq-100 stocks trading on PnF buy signals. Currently sitting at 44%, the reading is well below 2025 highs (82%) and is lower than even the small cap 600 ^BPSPSML, a group which has failed to put in any form of upside action so far this year.  Despite this, NDX representative QQQ still bests small cap IJR by over 15%... confirming that sometimes, greater participation ≠ greater performance. While the decrease in participation for 2025 leader NDX is certainly notable (and perhaps a tad concerning if it persists…) remember that these readings are telling you who is driving market movement. To put it simply, markets can still advance at the hands of just a few stocks. That kind of market environment might be uncomfortable at best… but big stocks trudging higher while others go through fits and spurs of catching up is certainly nothing new.

To explore this idea further, we can look at two technically acceptable Nasdaq-100 representatives. Cap weighted QQQ holds a strong 5.75 fund score, and while it is a tad extended around current levels the overall picture is still quite strong. Equal-weighted QQEW has pulled back off July highs but is still up ~9% this year and holds a 5.10 fund score. With the understanding that participation is waning, we can compare the two against each other using a sensitive 1% chart. As you might expect, QQQ has maintained a RS buy signal against QQEW since 2023, most recently posting its fourth consecutive buy signal as it moved to all-time relative highs to open August.

All this to say, take this as further confirmation that the core of the market continues to dominate. While arguments for investment can be made for several equal weighted options (QQEW, RSP, etc.) the overall risk/reward picture isn’t as attractive at current levels as mega-cap names lead markets to all-time highs.

U.S. Equity indices have rebounded this week through Thursday’s (8/7) close with the S&P 500 Index (SPX) rallying 1.63%. SPX continues to maintain a column of Os currently, but Thursday’s action brought the Nasdaq Composite (NASD) and Nasdaq-100 (NDX) back into a column of Xs. Like the Russell 1000 after it reversed back into Xs earlier this week, NASD and NDX now have near-term support closer to recent chart highs.

While indices still trade near recent highs, NDW users have seen participation indicators move lower with the recent market pullback as the bullish percent (BP) for the NYSE move to just above the 50% mark. The decrease in participation by the BPs indicates some stocks are moving to sell signals, but depending on the level of downside action, some stocks have shifted to negative near-term relative strength (RS) whether against the market or peer group. Evidence of stocks within sectors showing negative near-term market relative strength can be seen within the RS in Xs indicator (^RSX).The table below shows the increase or decrease in the RSX indicators for the NDW 40 Groups/Subsectors since the beginning of August (7/31 – 8/7). 

While some groups like Protection Safety Equipment and Precious Metals have seen an increase, the primary focus is on those groups with notable decreases. With Semiconductors, Media, Software, Restaurants, and Aerospace Airline being the groups with the largest decreases in near-term relative strength, stocks within said groups would potentially be ones to evaluate. Below is a short list of S&P 500 stocks that have seen their near-term market relative strength shift to negative since the beginning of August. Evaluations of a select few are discussed below.

Bear in mind, this list just shows stocks that have moved to negative near-term relative strength and should not be construed as a verbatim buy or sell list. Some stocks still may maintain acceptable technical attribute ratings but are worth monitoring closely due to their recent downturn in near-term RS. Berkshire Hathaway (BRK.B) is a prime example as the stock has been at least a 3 technical attribute for more than five years. On the point and figure trend chart, BRK.B met resistance at $536 earlier this year before returning to a sell signal in June by breaking a double bottom at $496. Through the remainder of the summer, the stock has fallen down to $456 and roughly where it began 2025. Action earlier this week brought the market RS chart in a column of Os for the first time since March 2022, dropping the stock to a 3 technical attribute rating. While still acceptable, long-term holders of BRK.B will look to monitor near-term support in the $440 range as a violation here and potential test of support around the $400 range could impact the technical picture further and warrant a potential call to action.

Along with the other Semiconductors stocks, On Semiconductor rallied notably off its April 2025 chart lows: giving fourth consecutive buy signal and moving back into a positive trend by early June. At that point in time, (ON) had improved to a 3 technical attribute stocks and investors may have looked to add to an improving name within Semis. Action within the past week though has brought the stock back to a sell signal on the trend chart and to within a couple boxes of the bullish support line.  This downturn in price diverged enough from the market as defined by the S&P 500 Equal Weight Index (SPXEWI) to lead the market RS chart to reverse into Os, dropping ON to a 2 for 5’er. Given the chart’s closeness to the bullish support line, which would be violated with a move below $43, along with the negative near-term market RS provides evidence the recent run within the stock has ended. Those who maintain exposure to ON may look to lighten up at a minimum or step away depending on cost basis.

The list of stocks shown above is by no means a comprehensive list of stocks showing negative near-term market relative strength as 240 of the 500 stocks within SPX currently possess negative near-term market RS. The examples shown are meant to provide insight into how the analyst team would evaluate these positions. Should there be a question about a particular position, feel free to reach out to the analyst team at (804) 320-8511.

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